Unfortunately, many of our colleagues are ill-prepared to face (let alone deal with) the changes that are being imposed.
Consider the IT impacts in recent years. Those of us with grey hair remember the old manual journals and the introduction of computers. The IT implications are pervasive; however, they are but a harbinger of the far greater disruption that is coming.
About two years ago, I realised that the changes coming in our industry are going to fundamentally alter what we do, how we do it, who we do it for, who we do it with and how much we can charge for it. My considered response to what I see coming? Sell.
Let’s look at the issues you need to grapple with:
Blockchain will alter your life. No longer will you be required to “tick and flick” or perform your system analysis and reviews. All transactions will be independently verified through the blockchain which removes any need for attestation. Couple this with the increasing use of Artificial Intelligence (AI) and a lot of the consulting work will disappear too. What are the auditors going to do? Move into tax? Go into compliance?
Many online platforms are making it more streamlined, cheaper and easier for your customers to do more of the work themselves. Outsourcing is driving the “basic” level work offshore at reduced costs and improving quality and efficiency. Recent discussions with some senior practitioners revealed that they, like me, fear the traditional training ground for graduates will disappear. Who then will we have to bring through the profession?
Your customers are also going to realise that they are doing more of the work and the systems they use can now interface with other platforms that give them far greater visibility on the business analysis work. All that work you used to do and charge for will go. What are the suburban accountants going to do? Audit will be gone.
Some years ago, one of the big four in the UK engaged the best and brightest tax brains around UK taxes to effectively flowchart the entire UK tax legislation. This then formed the basis of an AI based solution which could be queried directly regarding tax matters. End result? Quicker, more current and thorough responses to challenging taxation issues. What are the tax advisers going to do?
Personally, I believe there will always be a role for the corporate undertakers. Mind you, with improvements in AI, implementation of blockchain and greater emphasis on IT collection of data for corporate reporting, much of the lower level grunt work done by insolvency guys is likely to be substantially reduced. Couple this with the blockchain and its ability to verify transactions prior to them occurring (enabling surety of payment etc) and the likelihood of default payments will be reduced which will impact on the “survivability” of companies resulting from cashflow crises.
Your customers are going to stop being alright with the billing by the hour caper. More firms are moving to agreed-pricing for their engagements. This is partly to grow revenue but also currently a highly attractive competitive advantage. The “bill and hope” mentality is changing. Similarly, your customers understand that your workload has now decreased and is being replaced by software. They also know outsourcing has lowered your costs and they want a share of it - after all, they have been used to paying you based on your costs!
Because your competitor up the road is trying to build his book as customers push prices down, he undercuts his pricing to “buy” your clients from you. And so the vicious race to the bottom ensues. Trust me, there will be no winners!
Aside from the competition you are getting from your colleagues in town, you are also getting competition now from lawyers, the banks and financial planners. Our position as “trusted advisers” is being whittled away.
Accounting is, at its essence, a people business. We employ them, we deal with them and we liaise with lots of them in our role. All the truly successful practitioners I have met over the decades are, at their core, “people” people. When you look at the senior partners in the large firms and the successful practitioners in their smaller cousins, the vast majority of them fall into a category which is more focussed on “relatability” rather than (necessarily) technical excellence (don’t get me wrong, most of them are highly technically skilled, it’s just that takes second string to their natures).
For eons, accountants have been able to hide behind the persona of “the boring accountant” – just look at all the jokes out there about us! The changes coming are going to throw the journal-pushing backroom dude out the window. They will no longer be relevant as they will be replaced by a computer chip.
Similarly, recruitment of people into firms is going to change. No longer the need for technically focussed “grunts” who the firms inculcate into the productivity machine. Firstly, the upcoming generation don’t like this, they don’t see a real career path in flogging yourself for years to achieve more of the same and they like more flexibility in their lives. Secondly, they see the partners within the larger firms (especially) not working together but rather having more competition internally than they get externally. This was sheeted home to me recently when a relatively new partner in one of the Big Four was complaining about the lack of collegiality and every partner trying to steal each other’s customers. The junior staff see this and don’t like it.
The other thing junior staff really detest is the timesheet. They have a completely different mentality to the generations before them and would rather be assessed on the quality of their output rather than the inputs. They also want to use their professional judgement and expertise – it’s difficult to do this when the partners of a firm are assessing performance on billable hours. In short, they want to be effective whilst the traditional firms want them to be efficient (but still fully chargeable). A lot of younger people in the profession have told me they hate the idea of having to account for every six minutes of their day. Their need for social media and the like impacts heavily in this arena and the firms that don’t adjust their approach for the next generation will find it increasingly hard to recruit, let alone retain, quality people.
University & Professional Accreditation
The professional associations are incredibly slow in responding to the changed environment. They still require certain pre-requisite courses from a university graduate before they can undertake the program. The universities know that the courses they are teaching are not useful, relevant and employer-centric but they are unable to teach broader subject bases because the professional bodies will not accept candidates into the post-grad programs unless they have a set of pre-ordained, non-negotiable subjects.
Looking overseas, the UK CA program will take anyone from any undergraduate degree. I believe things are pretty similar in the US with their CPA training. Why are our professional associations not “moving with the times”?
Providing courses that are (largely) outdated to meet education pre-requisites based on historical drivers rather than future needs is a recipe for disaster.
Where to from here?
It is incumbent on us as the current custodians of our profession to think long and hard and act on that thinking to ensure we leave a legacy that is attractive, useful and fulfilling for our colleagues in the future.
Unfortunately, I do not believe we are being served well at the current time and this will lead us and our profession to a destination which is not desired.
The profession is changing and it is changing quickly. Action needs to be taken otherwise we truly will see a “race to the bottom”, see our relevance to the business community diminish and, the last remaining few practitioners that do remain will be seen as “rusted advisers”.